U.S. Stocks Waver After Earnings-Driven Jump
April 24 2019 - 02:22PM
Dow Jones News
By Georgi Kantchev and Amrith Ramkumar
U.S. stocks swung between small gains and losses Wednesday amid
concerns about the health of the world economy, a day after strong
earnings propelled the S&P 500 to new highs.
The S&P was recently down 0.1%, a day after it registered
its first record-high close of 2019 on Tuesday. It is up 17% so far
this year. The Dow Jones Industrial Average also edged down 0.1%,
having entered the day 0.6% below last October's all-time high.
The tech-laden Nasdaq Composite fell less than 0.1%, after
earlier in the day logging an intraday record following its first
record close of the year.
Wednesday's subdued market moves came after strong earnings
boosted stocks earlier this week, in a year marked by a more
cautious Federal Reserve and a stabilizing economy. This year's
powerful rally marks a reversal from the fourth quarter of 2018,
when a selloff dragged the Nasdaq into bear-market territory and
left the S&P 500 teetering on the edge of ending its longest
bull run ever.
Still, some investors remain wary of a slowdown in economic
growth moving forward, particularly overseas. Data released
Wednesday showed German business sentiment fell in April,
indicating that Europe's biggest economy continued to lose
steam.
Analysts said Wednesday that concerns China may slow the pace of
policy easing following stronger-than-expected first-quarter growth
were also damping investor sentiment. Traders were monitoring the
latest moves in trade negotiations between Beijing and Washington,
which are slated to restart next week.
"There are still some one-off events that might affect us,
particularly as markets are already expecting some kind of a
resolution to the China-U.S. talks," said Ghadir Cooper, global
head of equities at Barings.
In one sign that investors were more anxious about the pace of
economic growth, the yield on the benchmark 10-year U.S. Treasury
note fell to 2.522%, according to Tradeweb, from 2.570% a day
earlier. Bond yields drop as prices rise, though they have
recovered since hitting a 15-month low late last month with
investors selling ultrasafe Treasurys and favoring riskier
assets.
In recent days, companies like Twitter, aerospace giant Lockheed
Martin and industrial conglomerate United Technologies have
reported solid results, helping ease worries of a sharp earnings
slowdown. Boeing and eBay were among the companies rising Wednesday
following their latest numbers.
Investors have been looking to the earnings season for clues
about the strength of businesses and the economy, with profit
results generally coming in better than many had feared so far.
"Earnings expectations were dialed down. It turns out things are
much better," said Randy Warren, chief investment officer of
Philadelphia-based Warren Financial. "Markets have the support to
go higher."
The bar is significantly lower, however, after steep downgrades
to 2019 earnings forecasts in recent months.
Boeing shares added 0.4% after the company said it would take an
initial hit of more than $1 billion on the global grounding of the
737 MAX jetliner following two fatal crashes as the plane maker
suspended full-year financial guidance.
Shares of eBay climbed more 5.1% following the e-commerce
company's raised revenue and profit outlook.
In the energy sector, Anadarko Petroleum jumped 12% after
Occidental Petroleum offered to purchase the shale driller for $38
billion, launching a potential bidding war for a company that
previously agreed to be purchased by Chevron for about $33 billion.
Occidental shares fell 2.2%.
Among other market laggards, AT&T and Caterpillar fell
following their latest results.
Facebook, Microsoft and Tesla are scheduled to post earnings
after the market closes.
In Europe, the Stoxx Europe 600 switched between gains and
losses and ended down 0.1%, following modest declines across most
Asian markets. Hong Kong's Hang Seng fell 0.5% while Japan's Nikkei
closed down 0.3%.
Write to Georgi Kantchev at georgi.kantchev@wsj.com and Amrith
Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
April 24, 2019 14:07 ET (18:07 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.